Grede v. FCStone, LLC

Federal 7th Circuit Court
Civil Court
Citation
Case Number: 
Nos. 13-1232 & 13-1278 Cons.
Decision Date: 
March 19, 2014
Federal District: 
N.D. Ill., E. Div.
Holding: 
Reversed and remanded
Dist. Ct. erred in granting summary judgment in favor of plaintiff-Bankruptcy Trustee in action seeking to avoid pre-bankruptcy petition transfer made by debtor-investment management firm to defendant-debtor’s customer, as well as post-bankruptcy petition transfer of assets to said customer, where post-bankruptcy petition transfer had been approved by Bankruptcy Ct. Under 11 USC section 546(e), instant pre-petition transfer was exempted from avoidance provisions where: (1) defendant was commodity broker; and (2) instant transfer was “settlement payment” made in connection with securities contract, where transfer was essentially swap of customer’s securities for money pursuant to contract for purchase and sale of securities. Moreover, Trustee could not avoid post-bankruptcy petition transfer, since 11 USC section 549 precludes said avoidance, where Bankruptcy Ct. had originally approved said transfer. Fact that Bankruptcy Ct. had “clarified” said approval one year after original order by indicating that it had not actually authorized said transfer did not require different result.